BlackBerry: How Can Returns Possibly Exceed Sales

Apr.11.13 | About: BlackBerry Ltd. (BBRY)

This comical headline that seems to have appeared here by Detwiler Fenton and seemingly led to a massive sell off in BlackBerry (NASDAQ:BBRY) in the pre market bear raid. Upon careful and obvious examination there statement it one must ask:

"How can people return more units than were sold?"

To lend truth to this horrific headline, the stock saw a significant sell-off in premarket where it is easiest to manipulate due to lack of volume. This is certainly not the first nor the last bear raid to scare BBRY shareholders.

What We Saw in the UK and What Users Report in the US

Having personally visited over 50 stores in London over a two-month period, one comment that stood out was the comment that they had very little problems with the phones post sales. One Vodafone manager attributed this the OS being more stable than past BB OS's. Please see last month's SA note:

"Also very important to note here they have not had customer complaints or returns due to software glitches etc."

But hey, don't listen to me, just go and read user reviews at Best Buy or Verizon with a 94% product recommendation and tell me if you think this looks like a product which can possibly have a claim as silly as the one Detwiler Fenton that "Returns Exceed Sales?"

Why is This Happening Today?

There are three important short-term catalysts due to drive BBRY Higher:

  1. The Launch of the eagerly anticipated Q10 for which demand appears to be significantly higher than the Z10.
  2. The BES10 Server Launch in May that will drive enterprise sales as many enterprises need to hold back for this
  3. Technically, May 22nd last year saw a massive recall of loan stock from institutional investors needing to VOTE on the AGM. You cannot be "Shareholder of Record" if your stock is loaned out…Expect a stock recall prior to this.
  4. Expect an early June upside earnings statement due to Q10.

The above three reasons are putting a huge pressure on short investors to get out of this position. The exposed absurdity of the Fenton statement simply makes BBRY a screaming buy for a short-term trade today. I do not believe that serious investors sold this news, but rather shorts pressed their hand and HFT's kicked in. Therefore expect intra short covering in the afternoon.

Disclosure: I am long BBRY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.